Trump administration proposes 25% tariff to punish Brazil over trade practices

[WASHINGTON] The Trump administration has proposed a new punitive tariff of 25 per cent on many imports from Brazil, after deciding its practices were unfair on a range of issues from digital trade to illegal deforestation, top trade official Jamieson Greer said on Monday (Jun 1).

The measures, under the Section 301 trade legislation, cover areas such as electronic payment services, preferential tariffs, intellectual property protection and ethanol market access as well, the Office of the United States Trade Representative (USTR) said.

It proposed the new duties as it released the results of its unfair trade practices investigation into Brazil that started last year under Section 301 of the Trade Act of 1974.

But it excluded some items, such as beef, coffee, rare earths, other metals and aircraft parts from the new tariffs.

Brazil’s practices in the areas investigated “are unreasonable and burden or restrict US commerce, are thus actionable under Section 301(b) of the Trade Act”, the USTR said in a statement.

The tariffs would partially replace a tariff of 50 per cent on many Brazilian goods imposed last year by US President Donald Trump, with 40 per cent as a punishment for Brazil’s prosecution of its former president, Trump ally Jair Bolsonaro.

However, the US Supreme Court struck down those duties in February.

In a statement, Greer said that he launched the Section 301 investigation to tackle “longstanding and pervasive US concerns with certain of Brazil’s trade policies and practices”.

Despite recent engagement with Brazilian President Inacio Lula da Silva and his cabinet, Greer said that the United States and Brazil “continue to have substantial differences in resolving issues identified in this investigation”.

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Public hearing on proposed tariffs set for Jul 6

The trade agency invited comment on the proposed tariffs till Jul 1, with a public hearing set for Jul 6. It faces a Jul 15 deadline for taking “responsive action” in the Section 301 investigation.

Trump used the same statute to impose sweeping tariffs on Chinese goods during his first term.

The USTR has several other open Section 301 investigations that are expected to lead to new duties.

Among these are one covering excess industrial capacity in China and 15 other trading partners, as well as one into enforcement of forced labour bans in 60 countries.

The agency opened a new investigation on Friday into Vietnam’s intellectual property practices.

Regarding its Brazil findings, the USTR said that the proposed new 25 per cent tariff would not apply to Brazilian imports subject to national security-related tariffs under Section 232 of the Trade Expansion Act of 1962.

These include 50 per cent duties on steel, aluminium and copper and 25 per cent duties on finished products made from those metals, as well as a 25 per cent duty on motor vehicles and auto parts.

The USTR said that products exempted from the proposed 25 per cent tariffs included many fruits and nuts, crude oil and petroleum products, pharmaceutical compounds, organic chemicals and fertilisers.

These are in addition to beef, coffee, rare earths, certain other metals and ores and Brazilian aircraft and aircraft parts. REUTERS